Originally Posted by
FlyBitcoin
Look at the 2023 devaluation and walk-back.
That was DL saying that the stress on their Club capacity, and to a lesser extent, swelling PM and DM ranks from CC users far exceeded their estimations.
They did a poor job of predicting spend from a cohort high-volume users determined to boost status to PM and DM using the cards. And this on top of rollover miles and CC spend (rather than MQD) determining status, which they fixed in 2024.
DL also has people who purchase an SC membership outright, and DM's who achieve status from BIS miles who could move that demand elsewhere. These people were the collateral damage from the 2023-4 overcrowding. DL doesn't want to lose these people.
They don't want to repeat 2023 again. Look for them to capture more $$ up front with the AF and keep benefits relatively constant. And if spending takes a downturn during a customer's card year, collecting a higher AF cushions that blow a bit.
Gamifying the process with a third tier card would be a bloggers delight with post after post of how to maximize the value and find the loopholes to "beat the house". The house always wins when you charge more admission and keep the game the same.
True, I suppose they could have underestimated the interest in spending on their cards, which doesn't necessarily seem like a bad problem to have. During that devaluation, FT was suggesting that there would be widespread cancelling of cards/movement of spend over to other cards because there was no reason to spend on DL cards any further, which doesn't appear to have happened.
I don't know how many people pay for memberships. I suspect far fewer than the number of people who spend on their cards. And DL makes much more profit from people spending on non-DL items than it does from people who pay for lounge memberships. DL's already made it clear that they don't value DM road warriors who are earning from BIS - all they care about is spend, whether it's you paying $20K for one flight or $20K for 100. They would prefer the former.
DL's already found that there's very little relationship between the benefits they offer and spending on these cards. It would be much better if people operated rationally, but they don't. And frankly, while you're absolutely correct that the house wins when they charge more and keep the game the same, DL massively eroded benefits over the last decade and their elite ranks still flooded. There were still plenty of people furious here at the DL deval in 2023 having sat through devaluation after devaluation over the prior decade.